Higher oil prices could mean lower fuel price cuts in January

Although the fuel price relief that consumers have enjoyed in the past two months looks set to continue, January’s petrol and diesel price decreases will be smaller than expected.

This is thanks to higher international oil prices in the second half of December.

The latest daily snapshot from the Central Energy Fund shows average over-recoveries pointing to potential decreases of between 44 cents and 58 cents for petrol and R1.03 to R1.11 for diesel.

However, the latest day-on-day data shows smaller over-recoveries, meaning that by the end of the month those aforementioned decreases could be eroded by 10 cents or more.

This interplay makes it difficult to accurately predict next month’s fuel prices, but the bottom line is that a modest petrol price decrease seems to be on the cards.

While the month got off to a good start as Brent Crude oil dipped to around $74 in the early part of the month after ending November around $80. This led to a strong over-recovery despite the rand breaching the $19 to the US Dollar mark.

After hitting a six-month low last Wednesday oil prices rose by 3% as the International Energy Agency raised its oil demand forecast for 2024, Reuters reported.

Prices rose by another 2% this week after a Norwegian vessel was attacked in the Red Sea, prompting other shipping companies to avoid the crucial Suez Canal route.

Brent Crude was trading at $79 on Friday, December 22, but thankfully the rand had recovered to a level of around R18.43.

The official petrol and diesel price adjustments will come into effect on Wednesday January 03. Stay tuned to IOL Motoring for the announcement early next month.-IOL

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